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Oporto Court of Appeal | Arbitration Agreement | Mediator | Pathological Arbitration Clause | Case #130

Oporto Court of Appeal | Arbitration Agreement | Mediator | Arbitration Clause |   Case #130

Case nr. 26292/19.1T8PRT.P1




I. The arbitration agreement is a result of the mutual intention of the parties to refer to arbitration the resolution of a present dispute (submission agreement) as well as any future disputes arising from the legal relationship between them (arbitration clause).

II. When assessing the content of the arbitration agreement, we conclude that it may either only refer to the general obligation to arbitrate (standard arbitration agreement) or may specify the procedure and methodology (full arbitration agreement).

III. The mediation agreement is an agreement between the parties whereby they assign to a third party (the mediator) the task of assisting in the resolution of a dispute arising from a contractual relationship between them. This method of self-resolution of disputes prevails over other means of external determination of disputes, whether by arbitral tribunals or state courts.

IV. The mediation agreement may be standardized (generic mediation clause), making reference only to the mediation of the dispute and its subject-matter, or be otherwise detailed (specific mediation clause), indicating the precise terms to be followed in the mediation proceedings. But these clauses can also be tiered up, by firstly compelling the parties to mediate, upon the failure of which arbitration or litigation will follow (tiered mediation clause).

V. “Pathological arbitration clauses” are those that have unclear drafting, which impacts their scope and the intention behind the contract, making the option to resort to arbitration vague or even uncertain, such that it cannot be ascertained whether there was a clear decision to exclude the jurisdiction of State courts. This clause will become null and void when it is completely impossible to cure the uncertainty, which occurs when it is manifestly ambiguous, unintelligible or contradictory.

VI. In the present dispute, there is an “uncurable pathological arbitration clause” because the Rules of the Condominium state that “Disputes between the Condominium Members or between them and the Administration will, whenever possible, be submitted to Arbitration. Where it is not possible, the competent forum for the resolution of disputes will always be the Court of the District of Porto”.

Summary kindly prepared by Avani Agarwal, Final year law student at NALSAR University of Law, Hyderabad, India,